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Money and Banking - Quiz 2
Name:_
Student ID #_
Part I Multiple Choices: (only one of the four options is correct)
1) Which of the following statements comparing the European System of Central Banks and the
Federal Reserve System is TRUE? A
A) The budgets

Budget Deficits and Inflation
I
There are two ways the government can pay for spending:
raise revenue or borrow
Raise revenue by levying taxes or go into debt by issuing
government bonds
I
The government can also create money and use it to pay for
the go

Comparative Statics on n
A lower interest rate r raises the equilibrium level of
research
A higher size of the labor market L raises the
equilibrium level of research
A higher productivity of R&D raises the
equilibrium level of research
A higher size

Scale Effects in Endogenous
Growth Models
In all the models below, an increase in scale has the effect of
speeding up the rate of growth
Scale is measured by
human capital H
Romer
Grossman
Helpman
Aghion Howitt
Scale is measured by the
Labor force L
Where

PracticeQuestionfortheAghionandHowittModel
1)
(Midterm exam, 2001) Consider the Aghion and Howitt model of technology creation.
Suppose that there are only a fixed number of possible new inventions. Call this number T.
Once the Tth new technology has been

Institutions as the Fundamental Cause of
Long-Run Growth
Daron Acemoglu
Department of Economics, MIT
Simon Johnson
Sloan School of Management, MIT
James Robinson
Departments of Political Science and Economics, Berkeley
April 29, 2004
Prepared for the Hand

Metroeconomica 56:2 (2005)
233262
INNOVATION AND GROWTH WITH RICH AND
POOR CONSUMERS
Josef Zweimller and Johann K. Brunner*
University of Zurich and CEPR and University of Linz
(January 2001; revised January 2004)
ABSTRACT
This work studies the impact of

Expanding Product Variety Model
(Grossman and Helpman)
No physical or human capital (this makes it
different from Romer)
The final (consumption) good is represented as
a bundle of intermediate goods of differentiated
varieties with constant elasticity o

Labor Market
Total supply of labor must be equal to the
demand for labor in R&D sector and in the
manufacturing sector
Equilibrium
Equilibrium is characterized by two
differential equations in n (the number of
varieties) and v (the value of a firm).
Th

Chapter 4 Understanding Interest Rates
1) A loan that requires the borrower to make the same payment every period until the maturity date is
called a
A) simple loan.
B) fixed-payment loan.
C) discount loan.
D) a same-payment loan.
E) none of the above.
An

KEY #2
Econ 353 Fall 2003
Prof. Kilkenny
last updated: November 19, 2003
1. Ch4 Q6 What is the yield to maturity on a $1000 face-value discount bond maturing in one year that
sells for $800? The yield to maturity ("i*")of this security with F=$1000 and P